NEIL CAVUTO, HOST OF "YOUR WORLD": Back in Washington now, and one of my favorite guests of all time.

The one thing I love about Joe Lieberman is that he just brings integrity to the process, which is why he is leaving.

(LAUGHTER)

CAVUTO: He can't be bothered with this place anymore, the independent outgoing senator of Connecticut.

SEN. JOSEPH LIEBERMAN, I-CONN.: Great to see you.

CAVUTO: Senator, thank you very much.

LIEBERMAN: Thanks, Neil.

CAVUTO: Sure enough, given your reputation and respect that both parties hold for you, many argue you are going to be the guy that helps bridge this gap.

Do you see that role? And do you see anyone bridging this before the end of the year?

LIEBERMAN: Yes, Well, I would love to play that role, but I got to tell you that, right now, this is a very top-down hierarchical process.

I mean, it's the president and the four leaders, two Republicans, two Democrats, and really it's mostly the president and Speaker John Boehner. So the rest of us are watching. We're sending messages either by coming on to your show or by...

CAVUTO: The messages I have gotten is that you are not near a deal.

LIEBERMAN: Yes. Yes.

CAVUTO: Is that accurate?

LIEBERMAN: So, I think that is accurate, but the fact that President Obama, Speaker Boehner met at the White House Sunday, they put out the same statement, they haven't said anything for two days.

(CROSSTALK)

CAVUTO: Well, Speaker Boehner did. He was kind of griping about the president today not giving specifics on spending.

LIEBERMAN: Did he? Yes. Yes.

CAVUTO: Nancy Pelosi was saying, you know, Boehner is wrong to say the Democrats haven't come up with budget cuts.

LIEBERMAN: See, you have got to -- unfortunately, you have got to reach to find encouraging news right now.

And even though everybody thinks we are going to get together and not let the country go over the fiscal cliff, which, of course, in all common sense and sanity, that's what we would do, we have got to act. In other words, we're on automatic here. You know that.

And, right now, I can feel the contrary happening. I think, in both caucuses, in the Senate, people are beginning to react to the inside interest groups. So the Democrats are saying, oh, no, don't touch entitlement programs. The Republicans are saying, I won't support tax rate increases.

CAVUTO: Yes, that's what I'm hearing. And it seems to be driving further apart. No?

LIEBERMAN: Yes, and you not going to make it happen that way.

There is even beginning to be -- I mean, there are two kinds of conspiracy theories now. One is that the leaders actually won't mind if the country goes over the cliff, because then they will come back under that pressure and negotiate a deal in January.

CAVUTO: That is playing with fire, right?

LIEBERMAN: That is high-risk. That is really Russian roulette.

CAVUTO: But your own gut tells you what, Senator?

LIEBERMAN: My own gut is not sending me a clear signal now.

(LAUGHTER)

CAVUTO: Yes.

LIEBERMAN: I have felt all along that, in the final analysis, we would -- the Congress wouldn't let the country go over the cliff because the consequences could be disastrous.

And we might do it by doing nothing, by basically moving the goalposts and saying now the cliff comes to us in June 30 or September 30. But, again, that has got to happen. And that means a majority in both houses and president have to agree. And, right now, not happening.

I think I said this to you last time. The real tragedy here -- and it can make you real angry -- is that if you talk privately to most members of both houses...?

CAVUTO: Absolutely.

LIEBERMAN: ... they would tell you there's only -- the only way to do this, you have got to accept some revenue increases and we got to cut spending. And the main thing is cut the increase in entitlement spending.

And neither -- none of that is popular. But I think you -- the American people would understand that that's what we have got to do, not to be popular, but to help the country. And I think, if we negotiated a debt reduction agreement...